LaunchVic remakes 500 fund
Kate Cornick: LaunchVic divvies up 500 Startups' funding with accelerator services
LaunchVic has learned from last year’s 500 Startups mess, chief executive Kate Cornick said, as the Victorian government body revealed how the funding recovered from the deal will be spent.
Nearly a year ago LaunchVic was forced to pull its $2.9 million in funding to US accelerator giant 500 Startups after its founder was accused of misconduct by several women. It recovered all of the money and subsequently opened a new funding round for “world-class accelerators”, with the three recipients revealed on Tuesday morning through a drop to The Australian.
The round goes well beyond the near-$3 million promised to 500 Startups, with $7 million spread across two Australian accelerators and one international program.
A state government press release touted it was announced as a “$13.45 million investment” from the government, but only $7 million is being contributed through LaunchVic. The remaining $6.45 million will come from cash and in-kind funding from the three successful recipients, baked into the grant contracts from LaunchVic.
InnovationAus.com understands that cash and in-kind contributions are included in all LaunchVic contracts, but are generally not included in the overall government investment.
Sydney-based accelerator SBE Australia has received $1.5 million to run the Life Sciences program for at least 20 startups over three years, and the E3 program twice a year for at least 60 startups.
Skalata Ventures, run by former Melbourne Accelerator Program boss Rohan Workman, has scored $3 million to take in 60 scale-ups over three years, while international players Techstars has received $2.5 million to run a sports-tech program for 20 startups over two years.
Dr Cornick said the organisation had learned some important lessons from last year’s controversies, as it looks towards dishing out the rest of its $60 million fund.
“The 500 issue last year was certainly a difficult time, and one we learned a lot from. The ecosystem is stronger from having had a very important debate about sexual harassment in particular. We want to continue to make sure that our ecosystem is positioned not only as a strong ecosystem in terms of size and scale, but also that we are morally a very strong ecosystem,” Dr Cornick told InnovationAus.com.
“We’re here to support the infrastructure for the ecosystem, so we don’t see this as doubling the money and putting 500 behind us. But at the same time it is three new accelerators and that’s very exciting. We’re making sure we’re doing everything we can to make our state as prosperous as it can be.”
Following the 500 Startups issue, LaunchVic inserted a new clause into its contracts with grant recipients relating to harassment in the workplace, and now requires additional reporting from successful applications on the issue. The overall program for assessing grants remains the same.
“Our processes actually remained the same. We do have robust processes in place, and the way assessments take place with the grant committee up to the board making a decision is consistent in all of our grant rounds,” Dr Cornick said.
“One thing we did change was specifically relating to harassment and workplace harassment. Last year really shone a light on the ecosystem and some of the bad behaviours happening globally, and that gave us a mandate to tackle that issue head on. We learned from that.”
LaunchVic terminated its $3 million contract with 500 Startups in August last year, a month after harassment allegations emerged against its founder and figurehead Dave McClure. Mr McClure had been welcomed to Melbourne to launch the local program in July, after he had already been stood down from day-to-day operations due to the claims, but LaunchVic and the state government were not informed of this at the time.
LaunchVic initially placed 500 Startups “on notice”, before “pausing” the contract. It ultimately opted to terminate the contract after the local boss the program resigned in early August.
The agency soon opened a new funding round to replace the 500 Startups grant, looking for “world-class accelerators”, with the recipients revealed on Tuesday, nearly a year after the contract was terminated.
Dr Cornick said the funding is all about connecting local companies to global counterparts.
“What we’re really trying to do is to make sure that the Victorian ecosystem is very well tapped into the global network. Startup ecosystems don’t exist in isolation and the strongest ecosystems have linkages to other ecosystems. It’s really important that we are globally connected,” she said.
State innovation minister Philip Dalidakis said the latest funding round is focused on helping local tech companies grow and expand.
“We’re making an unprecedented investment in accelerator services so that Victorian startups can grow to their full potential and create the jobs that will sustain our future economy. Victoria is Australia's tech capital and growing our startup sector will help us maintain that reputation while boosting our economy and creating local jobs,” Mr Dalidakis said in a statement.
With a state election in November fast-approaching, the success of LaunchVic and the Andrews governments’ wider tech and innovation efforts are likely to be debated. While Dr Cornick said LaunchVic’s efforts are removed from politics, the body assesses the effectiveness of its grants through short and long-term methods.
“We’re an agency of government so we’re removed from the politics, but success is nevertheless important,” she said.
In the short-term, LaunchVic outlines a series of key performance indicators with grant recipients, such as the number of startups going through an accelerator or the number of people at an event. These are generally tracked once every three months.
In the long-term, the agency is looking to demonstrate the successful applicants have made an impact on the growth of the Victorian ecosystem and wider economy.
“We very, very strongly believe that the future of work and economy is changing, and startups are an important subset of that debate. We need to be supporting the startup community to grow and succeed so we make sure we really are positioning our futures to ensure we are creating the next generation of jobs,” Dr Cornick said.
“We’re monitoring and measuring grant recipients on a regular basis but we’re also measuring the ecosystem, how it’s growing and the funding people are getting.”
The latest funding round comes just a week after LaunchVic announced the recipients for its sixth round. The agency delivered $2.4 million to 15 projects across 26 local government areas for startup programs, with grants ranging from $50,000 to $400,000.
There are currently two other open funding rounds, one focused on entrepreneurial programs for Aboriginal Victorians which closed in late May, and another centred on the health startup sector which closed earlier this month.